Module VI· Cash Flow Statement MechanicsIntermediate
Question

How do you aggregate working-capital movements in the cash flow statement?

Answer

Calculate changes in operating assets and liabilities. Increases in AR, inventory, and other operating assets are cash outflows. Increases in AP, accrued expenses, and deferred revenue are cash inflows. Aggregate them into change in net working capital or show line-by-line. Exclude cash, debt, and non-operating items.